Redfin CEO Glenn Kelman admitted Thursday that “no one is more afraid” of Amazon than him, but also expressed doubt that the online retailer’s new partnership with Realogy is actually serious play for real estate business.
Glenn Kelman
“What they’re doing here,” Kelman said during an earnings call Thursday, “I’m not sure is a really serious move into the real estate market.”
The comments were a reference to a partnership, announced last week, that will see visitors to Amazon’s website referred to Realogy agents. Currently, 3,000 agents across Realogy’s various brands — which include Coldwell Banker, Century 21 and many others — are participating in the program.
Given the size of both Amazon and Realogy, the partnership was major news in the real estate industry last week and has prompted an ongoing conversation about its impact on agents.
However, responding to a question about the partnership during Thursday’s earnings call, Kelman said that he doesn’t believe consumers are turning to Amazon for the kinds of “soft services” that real estate professionals offer.
“I don’t think they’re a major demand channel for people seeking services like this,” he said, adding a moment later that “it is well outside their strike zone.”
In other words, few people are visiting Amazon.com as part of their real estate experience.
Still, Kelman did suggest that Amazon could potentially have a bigger impact on the real estate industry if the company pivoted away from “putting goods in boxes” and toward soft services.
“Those guys are animals,” Kelman said at one point during the call, referring to the retail giant.
Also during Thursday’s call, Kelman revealed that he sees significant expansion potential for Redfin Direct, a service that lets buyers make offers on Redfin-listed homes even if they don’t have an agent. Redfin unveiled the service earlier this year and it is currently available in Massachusetts and Virginia.
So far, the percentage of Redfin’s listings that have sold via Redfin Direct remains in the “low single digits,” Kelman said. However, in the future, he sees that number growing substantially.
“We hope to be able to sell 10 percent of listings to an unrepresented buyer,” Kelman explained.
He also said that Redfin Direct is easier to expand than other services because it doesn’t involve training individual people to work with consumers, as is the case with other types of products. Instead, Redfin merely has to build the forms and computer systems that guide a would-be buyer through the process of making an offer.
“We can scale it pretty fast,” he added.
Those comments may raise eyebrows in an industry that has seen a running debate about the role and utility of real estate agents.
Alhough Redfin has consistently said that it doesn’t want to do away with agents — and indeed employs agents itself — Redfin Direct does allow consumers to step away from the conventional agent-client relationship.
Consequently, the launch of the service prompted a heated discussion among real estate professionals about the wisdom of such an approach.
That debate is far from settled, but at least from Redfin’s perspective things appear to be going well. The company generally posted strong earnings Thursday, and Kelman indicated that Redfin Direct in particular is off to a strong start.
“We expected many offers to be ludicrous or half-baked,” he said.
But instead, Kelman said the offers have tended to be in cash, and “most have been within 5 percent of the asking price.”
